Madras High Court

M.Bharath Kumar vs N.Leelakumari on 11 August, 2022

                                                                      Arb.O.P(Com.Div) No.332 of 2022



                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                               DATED : 11.08.2022

                                                    CORAM

                                       THE HON'BLE Mr.JUSTICE M.SUNDAR

                                         Arb.O.P(Com.Div) No.332 of 2022

                  1. M.Bharath Kumar
                     S/o Madanlal
                  2. Rushabh B Shah
                     S/o M.bharath Kumar
                  3. K.S.Ramachandran
                     S/o Subramaniam
                  4. R.Shanti
                     W/o K.S.Ramachandran
                  5. R.Sharmila
                     W/o D.Rajesh Kumar
                  6. D.Manoj Kumar
                     S/o Dhanraj                                                    ... Petitioners

                                                       Vs.

                  1. N.Leelakumari
                     W/o.G.Norath Mal Bokadia
                  2. G.Lalithakumar Bokadia
                  3. R.Mamtha
                  4. K.Rakesh Kumar
                                                                                  ... Respondents

                  Prayer:- Arbitration Original Petition filed under Section 11(5) and 11(6) of
                  The Arbitration and Conciliation Act, 1996 praying to (a) appoint an
                  independent and impartial Arbitrator to hear and decide the disputes between


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                                                                                Arb.O.P(Com.Div) No.332 of 2022



                  the petitioners and the respondents (b) direct the respondents to pay the cost
                  of this petition.

                                  For Petitioners       : Mr.R.Sathish Kumar

                                  For Respondents : Mr.K.Muralidharan
                                                     ****

                                                           ORDER

This order will now dispose of captioned matter.

2. This order has to be read in conjunction with and in continuation of

earlier proceedings made in the first listing of captioned matter on

27.07.2022, which reads as follows:

'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 05.07.2022 under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience and clarity] with a prayer for appointment of an Arbitrator.

2. Mr.R.Sathish Kumar, learned counsel for six petitioners submits that the captioned Arb OP is predicated on clause 16 of a partnership deed dated 03.08.2012 qua partnership firm in the name and style of 'Jai Spaace'. This partnership deed dated 03.08.2012 shall hereinafter be referred to as 'primary contract'.

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3. Aforementioned clause 16 of primary contract reads as follows:

'16. Dispute Resolution : In case of any dispute arising among the parties herein relating to the business of the firm, the same shall continue to be referred to arbitration and shall be settled in accordance with the provisions of the Arbitration Act, 1940.'

4. Adverting to aforementioned clause 16 of primary contract, learned counsel submits that the same serves as arbitration agreement between the parties i.e., 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act.

Learned counsel submits that the arbitration clause refers to Arbitration Act, 1940 but obviously, A and C Act kicked in on and from 22.08.1996 and therefore, Arbitration Act, 1940 has to be read as A and C Act.

5. When the primary contract was operated i.e., when the partnership business was carried on, arbitrable disputes erupted between the partners inter alia pertaining to 20 acres of land which was purchased, developed and partly sold and learned counsel submits that dispute centers around the allocation of remaining land as amongst partners. To be noted, this is a thumbnail sketch of arbitrable disputes and it is not a exhaustive adumbration of arbitrable disputes.

6. Owing to eruption of arbitrable disputes between partners, a trigger notice dated 21.05.2022 invoking aforementioned arbitration clause was issued, the same has been duly received by the noticees but there is no reply and that has necessitated the

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presentation of captioned Arb OP in this Court is learned counsel's further say.

7. Prima facie case for issue of notice made out.

8. Issue notice to respondents returnable in a fortnight i.e., returnable by 10.08.2022. Private notice permitted.

9. List on 10.08.2022.'

3. Aforementioned proceedings dated 27.07.2022 shall now be read as

an integral part and parcel of this order. This means that the abbreviations,

short forms and short references used in the aforementioned proceedings

made in the listing on 27.07.2022 shall continue to be used in the instant

order also for the sake of convenience and clarity. To be noted, thereafter

there was one listing on 10.08.2022 but the matter was re-notified and it

stood over for being listed today.

4. In the hearing today, Mr.R.Sathish Kumar, learned counsel for the

six petitioners and Mr.K.Muralidharan, learned counsel for all the four

respondents are before this Court.

5. Adverting to aforementioned proceedings made in the listing on

27.07.2022, both learned counsel submit that the crux and gravamen of

captioned Arb OP has been correctly captured in the proceedings.

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6. Be that as it may, learned counsel for respondents has taken an

extremely fair stand which has made the task of disposal of captioned Arb OP

very simple. Learned counsel for respondents, on instructions submits two

points and they are as follows:

a) There is no disputation about the existence of arbitration

agreement i.e., Clause 16 of primary contract. To be noted,

primary contract is a Partnership Deed dated 03.08.2012 qua a

Partnership Firm in the name and Style 'Jai Spaace'.

b) Learned counsel submits, on instructions, that the respondents

consent for the name of learned counsel suggested [in paragraph 5

of 21.05.2022 notice] to act as sole Arbitrator.

7. This Court places on record its appreciation for the fair stand taken

by the learned counsel for respondents. It is also deemed appropriate for the

purpose of specificity to make it clear that consent qua the respondents is

only with regard to the existence of arbitration agreement and with regard to

the choice of Arbitrator. In other words, there is no concession or consent

regarding the arbitrable disputes or lis between the parties, all of which are

left open for the learned sole Arbitrator to be decided on the merits of the

matter in accordance with law.

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8. Before writing the concluding portion of this order, this Court deems

it appropriate to set out that a legal drill under Section 11 of A and C Act

usually perambulates within the statutory perimeter sketched by sub-section

(6A) thereat, which reads as follows:

'(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.'

9. Aforementioned sub-section (6A) of Section 11 of A and C Act

came up for consideration before Hon'ble Supreme Court in oft quoted

Mayavati case law i.e., Mayavati Trading Pvt. Ltd vs Pradyuat Deb Burman

reported in (2019) 8 SCC 714. Relevant paragraph is paragraph 10 and the

same reads as follows:

'10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the

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judgment in Duro Felguera SA.' (underlining made by this Court to supply emphasis and highlight)

10. Mayavati case law (particularly paragraph 10, extracted and

reproduced supra) takes this Court to Duro Felguera case law i.e., Duro

Felguera S.A. Vs Gangavaram Port Limited reported in 2017 (9) SCC 729,

relevant paragraphs are paragraphs Nos.47, 59, which read as follows:

'47. What is the effect of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as "the 2015 Amendment") with particular reference to Section 11(6) and the newly added Section 11(6-A) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act") is the crucial question arising for consideration in this case.

59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co.

and Boghara Polyfab. This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists – nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Courts intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.'

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11. In the light of aforementioned obtaining position qua a legal drill

under Section 11, as the examination of existence of arbitration agreement is

answered in the affirmative and as the respondents consent for the name of

learned Member of the Bar suggested (to be noted, suggested by Petitioners)

to act as sole Arbitrator, Mr.D.Shivakumaran, Advocate with address for

service at Old Shaw Wallace Building (2nd Floor), 336 (166), Thambu Chetty

Street, Chennai-600 001 is appointed as sole Arbitrator. Both learned

counsel submit that they have taken the consent of learned Arbitrator to hold

sittings in Salem City. If a request is made, learned Principal District Judge,

Salem shall make available the space available in the 'DLSA' ['District Legal

Services Authority'] office for conduct of arbitration. However, it is open to

learned Arbitrator, counsel and parties concerned to choose any other 'place'

(in Salem City) for sitting subject to convenience of all concerned. Learned

Arbitrator is requested to enter upon reference qua aforementioned primary

contract, adjudicate the arbitrable disputes that have arisen between the

parties and render an award. The fee of the learned Arbitrator shall be in

accordance with the Fourth Schedule of A and C Act.